Job Growth Continues Slowdown in December

The U.S. economy added just 18,000 jobs to payrolls during December, far fewer than had been expected, and down from the 115,000 jobs created in November. In addition, the nation’s unemployment rate climbed to 5.0 percent, the highest in two years. The numbers, released late last week by the Department of Labor, continue to show a trend of an overall slowdown in economic growth. The 18,000 new jobs created in December were the fewest in a month since August of 2003, when a decrease in new jobs was reported. Another decrease was reported this past August, but that number was later revised upward to a gain. Though December’s numbers may be similarly revised upward, there is no doubt that the economy is slowing. Overall, 2007 saw the weakest annual job growth since 2004, and the unemployment spike from 4.7 in November to 5.0 this month was “particularly worrisome,” according to Ken McCarthy, managing director of New York area research for real estate services firm Cushman & Wakefield Inc. “The actual number of unemployment claims went up by 474,000 in December, which is the largest (month over month) increase since October of 2001,” McCarthy told CPN today, adding that the number of unemployed Americans was the highest since May of 2005. McCarthy (pictured) cited the continued decline in the construction of new single-family homes, as well inclement weather in many part of the county, as two major reasons for the sharp drop in construction employment, which saw a loss of 49,000 jobs in December. The retail sector was somewhat buoyed by the holiday shopping season, adding 93,000 new jobs, but the seasonally-adjusted numbers actually revealed 24,000 fewer jobs than normal. The news was a bit better for office using employment, noted McCarthy, who pointed out that the sector was up about 26,000 jobs. “We’re still seeing growth in industries that use offices,” he said. “The key is going to be what happens in the financial services area (which has seen sharp declines) and how that’s countered by the gains in professional business services.” For now at least, the continued strength in business services (such as law and accounting firms), which added 43,000 jobs in December, is largely countering the struggles in financial services, which includes such firms as investment banks, and saw a loss of 4,000 jobs during December. McCarthy said it was too soon to say definitively whether or not the struggles in financial services will spill over into the professional business services sector. He did note, however, that in 2006 an average of about 50,000 new office-using jobs were being added per month, a figure that decreased by about half in 2007. McCarthy said that, although it is not yet clear if a recession looms, the Federal Reserve is almost sure to slash interest rates again at its meeting at the end of this month. “The Fed is going to have to react to (the December jobs report),” he predicted. “Prior to this report, you could argue that they should wait, because the impact of the previous cuts hasn’t been felt yet, but the debate we’ll see now is more about whether they should cut by 25 or 50 basis points.”